Warren Buffett | Biography, Books, Net Worth, & Facts
Warren Buffett | Biography, Books, Net Worth, & Facts
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Warren Buffett, in full Warren Edward Buffett, (born August 30, 1930, Omaha, Nebraska, U.S.), American businessman and philanthropist, widely considered the most successful investor of the 20th and early 21st centuries, having defied prevailing investment trends to amass a personal fortune of more than $100 billion.
Known as the “Oracle of Omaha,” Buffett was the son of U.S. Rep. Howard Homan Buffett from Nebraska. After graduating from the University of Nebraska (B.S., 1950), he studied with Benjamin Graham at the Columbia University School of Business (M.S., 1951). In 1956 Buffett returned to Omaha and in 1965 took majority control of the textile manufacturer Berkshire Hathaway Inc., turning it into his primary investment vehicle. From the 1960s through the ’90s the major stock averages rose by roughly 11 percent annually, but Berkshire Hathaway’s publicly traded shares gained about 28 percent per year. Though Buffett’s success with Berkshire Hathaway made him one of the world’s wealthiest men, he eschewed lavish spending and criticized governmental policies and taxation that favoured the rich over the middle or lower classes.
In June 2006 Buffett announced that he planned to donate more than 80 percent of his wealth to charitable foundations; in 2020 he raised that amount to 99 percent. The main recipient was the Bill & Melinda Gates Foundation—created by Microsoft founder Bill Gates and his then wife, Melinda—which focused on issues of world health and education; Bill and Buffett had maintained a close friendship since the early 1990s. The other organizations receiving donations included those run by Buffett’s three children and the Susan Thompson Buffett Foundation, named for his late wife, which focused on women’s reproductive rights and funded college scholarship programs. In 2010 Buffett and the Gateses created the Giving Pledge, an invitation to other wealthy individuals to donate the majority of their fortune to charities.
During the subprime mortgage crisis of 2007–08, Buffett made a number of deals that, though questioned at the time, proved highly profitable. In September 2008 he invested $5 billion in the U.S.-based bank holding company Goldman Sachs Group, Inc., and the following month Berkshire Hathaway purchased $3 billion in General Electric Company (GE) preferred stock. In November 2009 Buffett announced that Berkshire was buying the railroad company Burlington Northern Santa Fe Corporation for about $26 billion; the investment group already owned approximately 23 percent of the railroad. Berkshire Hathaway also had significant shareholdings in companies it did not control, including Coca Cola and Apple.
Berkshire Hathaway: At a glance
Berkshire Hathaway emerged from the combination of two textile companies in the late 19th century. The company has evolved into an iconic American conglomerate and investment vehicle under the stewardship of the legendary investor Warren Buffett, famously dubbed the Oracle of Omaha.
Portfolio and business structure
Berkshire Hathaway’s business and investment model is focused on acquiring and managing businesses across multiple industries:
- Full acquisition. Berkshire Hathaway has purchased a number of companies outright, giving it complete control over their business operations, management, and boards of directors (although it is not common practice for Berkshire to intervene in a company’s operations). Companies acquired fully by Berkshire Hathaway include GEICO, Dairy Queen, and BNSF Railway.
- Controlling majority interest. As a majority shareholder in various companies, Berkshire Hathaway has significant influence over their voting rights and management. Berkshire Hathaway has historically held controlling majority interest in companies such as Kraft Heinz (KHC), Coca-Cola (KO), and American Express (AXP).
- Minority interest. As an investor, Berkshire Hathaway may own enough shares to wield significant voting power. For example, as of 2023, it holds a 5.8% interest in Apple (AAPL).
From 1965 on, Berkshire Hathaway expanded its portfolio significantly, acquiring well over 60 companies (subsidiaries) and holding partial ownership in numerous others.
1888–1962: The early years
Berkshire Hathaway traces its history back to two Massachusetts textile firms: Hathaway Manufacturing Company (incorporated in 1888) and Berkshire Cotton Manufacturing Company (incorporated in 1889). Berkshire Cotton became Berkshire Fine Spinning Associates in 1929 and merged with Hathaway to form Berkshire Hathaway, Inc., in 1955.
After World War I, the textile sector in New England witnessed a significant downturn, but this trajectory of decline was interrupted in the period after the Great Depression. A year after its incorporation, Berkshire Hathaway had 14 plants and more than 10,000 employees; the newly merged company became a behemoth in the New England textile industry.
Despite its impressive scale and production capacity, Berkshire Hathaway continued to incur losses over the next seven years. Its net worth plummeted by 37%. Nine of its plants were shut down during this period, and the liquidation proceeds were redirected toward share buybacks. This is what caught Warren Buffett’s attention: Berkshire Hathaway’s shares seemed to be trading at a discount compared to its productive potential.
1962–1965: Warren Buffett begins accumulating a majority stake
Buffett Partnership Limited (BPL), an investment group led by Warren Buffett, began purchasing shares of Berkshire Hathaway in 1962 at $7.50 per share, a significant discount compared to the company’s estimated book value of $20.20 and per-share working capital of $10.25. Amid continuing plant closures and share repurchases, Buffett began aggressively acquiring Berkshire stock, allowing him to take control of the company in 1965.
1965–present: From textile company to conglomerate
Despite enjoying a period of growth in the textile business in the two years following Buffett’s takeover, Berkshire Hathaway’s net worth was still down by 64% from 1955. (Its textile business continued to struggle over the next two decades.)
Warren Buffett began shifting Berkshire Hathaway’s business strategy, laying the foundation for its investment and acquisition operations. By 1985, the year in which Buffett liquidated the company’s textile operations, Berkshire Hathaway had already evolved into a well-established holding company.
Buffett, a staunch proponent of the value investing philosophy, built up Berkshire Hathaway by buying stock in undervalued companies, acquiring many of those businesses, and then allowing considerable autonomy to the managers of the newly acquired subsidiaries and businesses in which Berkshire Hathaway held a majority and minority stake.
From the early days of Buffett’s leadership, insurance companies formed a significant portion of Berkshire Hathaway’s portfolio. National Indemnity Company and National Fire & Marine Insurance Company (now a part of National Indemnity) were both purchased in 1967, followed by GEICO in 1996 and General Reinsurance in 1998.
Nevertheless, Berkshire Hathaway strived for diversification through its various acquisitions. For instance, it acquired Scott Fetzer Company (1986), owner of reference and educational publisher World Book; Benjamin Moore (2000), maker of paint; and Fruit of the Loom (2002), manufacturer of underclothing.
The purchase of the Burlington Northern Santa Fe Corporation (2010), owner of BNSF Railway, for about $44 billion marked the largest deal Berkshire Hathaway had ever undertaken. However varied its scope of acquisitions, Berkshire Hathaway has normally set its sights on mature rather than emerging industries.
Berkshire Hathaway also has significant shareholdings in companies it does not control. For example, since 1989 it has owned between 6% and 10% of the Coca Cola Company, and by 2021 it had acquired more than 5% of Apple stock. And, as of 2023, the company owns 34% of Kraft Heinz (KHC).
Warren Buffett’s Net Worth Over the Years
According to Forbes, Warren Buffett’s net worth in September 2023 is $120.3 billion. He is currently the 5th richest person in the world.
Warren Buffett’s Net Worth by Age
Warren Buffett hasn’t always been one of the richest men in the world. Warren Buffett didn’t even become a billionaire until he was 50 years old. In fact, 99% of Warren Buffett’s net worth was earned after his 50th birthday.
Warren Buffett always had big ambitions. His goal as a kid was to become a millionaire by the time he was 30. And he did it.
The bottom line
Under Warren Buffett’s leadership, Berkshire Hathaway’s model of buying established yet undervalued businesses and maintaining significant stakes in leading companies has proven successful over the decades, reflecting Buffett’s renowned value investing philosophy and solidifying Berkshire Hathaway’s position as an iconic American conglomerate.
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